The Federal Reserve’s internal watchdog has launched its own review of the failure of Silicon Valley Bank, a spokesman confirmed, separate from the probe that the Fed’s vice chair for supervision is leading.
(Bloomberg) — The Federal Reserve’s internal watchdog has launched its own review of the failure of Silicon Valley Bank, a spokesman confirmed, separate from the probe that the Fed’s vice chair for supervision is leading.
The investigation by the Fed inspector general, which began March 14, will assess the supervision of SVB by the Fed Board of Governors in Washington and examiners at the San Francisco Fed, and will make recommendations as appropriate, the spokesman said. The IG plans to complete the review within six months. The New York Times earlier reported on the existence of the IG probe.
The US central bank announced this month that it would conduct its own review of what went wrong at SVB led by Fed Vice Chair Michael Barr, the results of which will be released by May 1. Lawmakers on both sides of the aisle have called for an outside investigation into the problems leading up to the bank’s collapse.
Senator Tim Scott, the top Republican on the Banking Committee, called the Fed board’s internal review “an obvious, inherent conflict of interest and a case of the fox guarding the hen house” at a hearing with Barr on Capitol Hill Tuesday.
The Fed IG has oversight authority within the central bank, and is appointed by the Fed chair. The current IG, Mark Bialek, was appointed in 2011 by then-Fed Chair Ben Bernanke. Senator Elizabeth Warren, a Massachusetts Democrat, and Rick Scott, a Florida Republican, have introduced bipartisan legislation to make the Fed watchdog a Senate-confirmed official nominated by the president, similar to IGs at other federal agencies such as the Treasury Department.
“Consistent with the IG Act, we have the same independence and authorities afforded to all Inspectors General to audit and investigate the Board,” the Fed IG office said in a statement. “We have and will continue to provide independent and robust oversight over both the Board and the CFPB.”
(Adds comment from Fed inspector general office in sixth paragraph)
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